Gold Up Big Time in 4 of These 7 Top Currencies

Owners of gold dominated in all the major currencies except the Swiss franc have all got the protection they sought against adverse circumstances when they first purchased the metal. In short, gold has performed as advertised.

By Michael J. Kosares (usagold.com). This article* was originally published under the title Gold spike in major currencies a remarkable start to 2015.

Gold is up significantly in 4 of the 7 top currencies (the euro, British pound, Australian and Canadian dollars), up respectably in 2 others (U.S. dollar and Japanese yen) and down slightly in the last (Swiss franc)…demonstrating amply the value of gold as a hedge, not just against inflation, but against sudden currency devaluation and systemic financial and economic risks as well.

Here is the amount gold has risen in percentage terms in the top currencies thus far this year (through 1/23/2015):

The spiking reaction in Europe, on the surface, appears directly attributable to the European Central Bank’s introduction of quantitative easing, but there is more to it than that as explained below.

Australian & Canadian Dollars

In Australia and Canada, the plummeting oil price has played a key role in driving down the two currencies precipitously, and gold sharply higher. It seems only a matter of time until the central banks in those two countries introduce their own versions of quantitative easing as a matter of necessity.

Japanese Yen

The Japanese yen chart shows a similar spike in the gold price, but a good portion of the upswing occurred late last year. (This post focuses on gold’s 2015 price performance.) In that regard, the yen price of gold led the pack.

Swiss Franc

Gold was performing similarly in the Swiss franc until the Swiss National Bank pulled the rug on its peg – a maneuver that resurrected the safe haven status of the currency and put a hold on the gold price.

My Conclusions

Gold’s broad rally in 2015, in my view, could very well signal resumption of the secular bull market that has been at rest for the past two years…Though it appears that gold and quantitative easing might be directly correlated, what is really going on is that both simply are reacting to the same problem – a bad economy with the potential for systemic financial and economic breakdown. Central banks respond by printing money. Investors respond by buying gold.

[The above article is presented by Lorimer Wilson, editor of www.munKNEE.comand www.FinancialArticleSummariesToday.comand the FREEMarket Intelligence Report newsletter (sample here – register here) and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. This paragraph must be included in any article re-posting to avoid copyright infringement.]

A short time ago I started looking at the question: “Is gold an effective hedge against a financial crisis?” Having studied the question in more detail, I find the answer is no, gold is not an effective hedge against a financial crisis. Here’s why. Read More »

Once the grip of the fiat “dollar” gives way, and it is slowly losing ground, then the price for gold and silver will find their more natural value – and not until then. When might that happen? It could be weeks, it could be months, maybe even another year or two, but whenever it happens, it is more likely to be an overnight “adjustment.” Plan accordingly. Read More »

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